The forex market is rapidly gaining popularity and due to this, it is attracting people from all walks of life. The deal is that they endeavor to invest huge amounts of cash and expect to receive the returns in a short while. Well, people have always gone for quick cash and so this is not a shocker. Due to the interest that most people have shown in this particular trade, many ECN Forex Brokers have also come up to assist with the same.
ECN brokers usually act as a link between the platform providers and interested traders. Brokers make their money through commission and so they are better than market markers. The criteria for identifying true brokers saves the day for new traders who are easily gullible since they are still learning the ropes of the trade. Below are ways on how you can find a true ECN broker trading platform:
Unlike market markers, true brokers do not have dealing desks. This means they will not be trading against you and so they will display the actual prices at that particular time. To establish whether a broker is not playing this game on you, you can open both a demo and areal account.
As you watch through the Forex news, you will be able to see whether the prices fluctuate or not. If they are changing, then it means that that particular dealer is trading against you and that they will not give you the best of offers. In other words, that is not a true ECN broker platform.
A true ECN broker should not have fixed spreads but rather variable ones. From the initial interaction you have with a potential broker, you can tell whether they are the real deal or not. A true broker will offer variable spreads. If they promise you fixed spreads then most likely you got the wrong one. Having variable spreads means that there is a range within which you can trade.
The Broker’s Chart:
In the forex trade, the broker normally has a forex chart and you as the trader should have your own chart. When determining whether you go the right middleman or not, you can compare what you have in their chart and yours. If you do not notice any differences in the BID price, then that means you found a true broker. False brokers or market markers normally have prices on their charts that differ from what the trader has.
These refer to unusual occurrences in the forex market and they are totally normal. However, your potential broker can win or lose a trader depending on the kind of forex slippages they portray. These unusual occurrences are expected to lean both on the positive and the negative sides of the scale. Therefore, if the broker you are considering both positive and negative slippages, then there you have a true one.
As the trader, you should be at liberty to place any lot of trades without any limitation or restrictions. However, some brokers will reject some orders and this is where you distinguish between true and false ECN brokers. For instance, if you place a trade that is bigger than five standard lots, a true broker will pass it. On the other hand, if your order gets rejected, then it means that a particular broker is a raw deal.
ECN brokers generate their income through commissions whether you win or lose in your trade. This, therefore, rules out the need for them to make any promises whether for good forex rates or discounts. As long as you place an order with them, their income is guaranteed. With this knowledge, therefore, anyone who rushes to make good promises might not be what you are looking for. True brokers only offer you what they have and allow you to make your orders without unnecessary persuasive language.
In the forex market, the pricing change every minute and so there is always needed for a live update from the market. The trader has the right to know how pricing is changing and decide when to make their orders for an exchange. A true ECN broker keeps the trader updated with real-time pricing straight from the market.
The popularity of the Forex trade has attracted both true and false brokers. This means that the responsibility to distinguish between the two lies with you. Do your homework well and use the criteria discussed here to get the real deal.